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Telkom South Africa optimistic about ADSL growth

Telkom is on its way to meet its ADSL target of at least 700,000 subscribers by 2011

Current estimates indicate that Telkom is on its way to meeting its target of ADSL customers equating to 15-20% of Telkom’s fixed access lines by 2010/2011.

This view was expressed by Alphonzo Samuels, Group Executive for Wholesale Sales and Marketing Operations who said that in most developed countries, broadband penetration ranges from 25% to 50% of fixed lines.

Samuels continued: “Considering our current penetration of just over 7%, we are clearly still in the infancy stage of the broadband maturity curve, with plenty of room to grow.”

He said that his confidence is borne out by the latest demand trends in the marketplace, adding: “Our traditional ADSL customer base has been the high LSM groups. While the demand among these groups is still there, it is now also spreading to the middle to lower LSM levels.”

Samuels believes that the demand among these “non-traditional” customers is mainly influenced by both the growing use of the Internet in the education system and the value proposition that ADSL offers.

“With outcomes-based education, parents are forced to assist their children with research and, increasingly, schools expect the internet to be used as a research resource. This creates a momentum for ADSL,” said Samuels.

Growth is also expected to be stimulated by the commoditisation of ADSL, the Do Broadband offering, the Self-Install Option, ADSL port automation and wholesale services.

Added Samuels: “At this point, we are only selling high-speed internet and have yet to move into value-added services like IPTV, video-on-demand and interactive gaming - these services will stimulate demand for ADSL, especially in the younger market.”

He said that young people in particular fully understand the benefits of triple-play and they will be the ones who will push Telkom’s customer base to allow the Company to meet its targets.

He pointed out, however, that successfully climbing the ADSL growth curve is not without its challenges, saying that the main challenge is to try to build ahead of demand.

“Demand is starting to come from areas not historically pre-provisioned for ADSL, notably the traditional Black, Coloured and Indian ‘townships’. Although there has been some penetration in townships, this has mainly been around shopping centres and business parks,” explained Samuels. The demand is also coming from the residential areas, where the Company does not have pre-existing infrastructure in place.

“An important step forward in matching supply with demand has been the creation of Telkom’s Broadband Register. Where there is demand but no infrastructure, the intelligence goes into the Broadband Register, which is fed into our build programme so that we are able to prioritise more effectively and efficiently,” said Samuels.

He explained that the build programme itself consists of two technology options. Where there is sufficient demand, we use fibre to the node, which puts an ADSL point of presence closer to customers. On the other hand, if there is sufficient demand but customers are outside the cable footprint, Telkom will deploy WiMAX technology.

“We will continue to seek various strategies aimed at increasing customer satisfaction in our efforts at seeking increased ADSL penetration,” concluded Samuels.

MyBroadband

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